The Pune Bench of Income Tax Appellate Tribunal (ITAT) has held that price paid by sugar cooperatives for the purchase of sugar cane higher than the fair and remunerative price (FRP) would be allowable as per the recent amendment in clause (19) of Section 155 of the Income Tax Act.
The Appeal had been filed by Someshwar SSK Ltd against disallowing its alleged sugar cane purchase price paid to the cane growers in excess of the fair and remunerative price and sugar sold at concessional rates to them having the amount in the assessment order dated 09.03.2016.
Prasanna Joshi on behalf of the assessee submitted that the latest legislative developments were not considered by the authority that the legislature had inserted clause (xvii) to Section 36(1) of the Income Tax Act regarding such a claim of expenditure incurred by a cooperative society engaged in the business of manufacture of sugar for purchase of sugarcane at a price which was equal or less than the price fixed or approved by the government.
He then quoted CBDT’s circular number 18/2021 which clarified that the relevant phrase “price fixed or approved by the government” in the above phrase to Section 36(1)(xvii) of the Income Tax Act also included the price fixation by the state governments through state level Acts/orders and other similar instruments, as the case may be which would also be higher than the price fixed by the central government
He further pointed out the latest statutory amendment inserting clause (19) in Section155 of the Income Tax Act for granting relief.
Sardar Singh Meena appeared on behalf of the revenue.
A similar set of facts had been decided by the Pune Bench of Income Tax Appellate Tribunal in Padmashri Dr. D.Y. Patil Sahakari Sakhar Karkhana Ltd. vs ACIT.
The two-member Bench of Satbeer Singh Godara, (Judicial Member) and Dipak P. Ripote, (Accountant Member) allowed the appeal filed by the assessee directing the AO to refer to the legislative developments as per law.
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